6 Questions To Ask During An Insurance Audit
The word “audit” is nearly always associated with financial woes, calls from the IRS, or budgetary cutbacks. With life insurance, however, the panic and fear can stay at bay, because a life insurance audit is a good thing. It may even save you some money.
Life insurance policies aren’t death documents that should only be pulled out when you’re ready to cancel the plan or there’s a need to file a claim. Today’s policies are much more complicated and flexible than generations past. You want your policy to be available for your beneficiaries if the time comes that it’s needed, so taking time to inventory your policy type, coverage amount, and beneficiaries will help ensure your family’s financial future is secure.
The audit is about more than paperwork. Take it as the time to review your goals with the policy and where there may be some coverage gaps based on any life changes you’ve made in the past year.
What type of policy do you have?
Is the policy’s original goal still relevant?
Who are the listed beneficiaries and are they still valid?
What changes in your health could affect your policy?
Is the premium you’re paying cheaper elsewhere?
Do you still need the life insurance policy?
The goal of the audit is to ensure your family is financially secure and your estate is being handled as you desire. For a thorough audit, you’ll need to obtain the original policy and illustrations, the most up-to-date annual statement and a current in-force illustration, which projects current costs to prevent your policy from lapsing. Share the documents with your advisor, or review them yourself to see if you’re paying too much or have any gaps in your coverage.
Audit Your Insurance Provider
An important step of a life insurance audit that is often overlooked is taking the time to review the financial stability and performance of your insurance provider. Not all companies are equal, and you need to ensure that your carrier has the ability to pay out future claims. Review the company’s investments and compare how it ranks against other providers. Your main concern is that the company can fulfill future financial commitments.
After The Audit
Once the audit is complete, you should feel confident that your family is financially secure should the unexpected occur. Your advisor should also guide you if any gaps on coverage or financial concerns are found when reviewing the company itself. Even if you make no changes to your policy, you can rest easy knowing you’re making the best investment possible for your family.
Each year, like clockwork, we do a number of things to make sure our family is safe – vehicle maintenance, upkeep on our home, health checkups – and life insurance should be no different. Filing a claim is not the time your family should discover your life insurance policy was not in order. Take the time once a year to audit your coverage and give them the security they deserve.
